Pensions: what's new this week - 16 May 2022
16 May 2022
Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
This week we cover topics including: Reminder: ‘Stronger nudge’ in force from 1 June 2022; Box Clever: new warning notice; Pensions dashboards: consumer protection blog post; PSIG transfer guidance update.
- Reminder: ‘Stronger nudge’ in force from 1 June 2022
- Box Clever: new warning notice
- Pensions dashboards: consumer protection blog post
- PSIG transfer guidance update
Regulations have been made under the Financial Guidance and Claims Act 2018 bringing the ‘stronger nudge’ requirements into force from 1 June 2022 – previously the relevant powers had effect only for the purpose of making regulations.
As a reminder, the stronger nudge will apply in relation to a person aged 50 or above who has a right to flexible benefits (and to individuals aged under 50 who are accessing benefits due to ill health). Schemes will be required to provide information about appropriate pensions guidance and offer to book an appointment with Pension Wise for any member in this category who contacts them about making an application to access flexible pension benefits or to transfer benefits with the intention of accessing them. Confirmation of attendance at a Pension Wise appointment or an opt-out will need to be provided before an application can proceed, and schemes will be required to keep records. Exemptions apply where beneficiaries have received guidance or regulated financial advice on the transaction in the past 12 months, or where they are entitled to a serious ill-health lump sum. There is no exemption for small pots.
Updated guidance for DC arrangements on communicating and reporting is available on the Pensions Regulator’s (TPR) website, explaining the new requirements and how they fit into schemes’ retirement communications.
TPR has issued a new warning notice in relation to the Box Clever pension scheme – this is the latest development in a long-running issue arising out of a joint venture in 2000 between ITV (then Granada) and Carmelite. In 2011, the Determinations Panel decided to issue financial support directions (FSDs) against five Granada/ITV companies (the Targets), requiring financial support for the Box Clever pension scheme. Protracted litigation followed and in March 2020 TPR announced that the five entities had six months to put appropriate financial support in place for the scheme.
The new warning notice has been issued because the amount and form of financial support have not been agreed. The Regulator has the power to issue a contribution notice in relation to non-compliance with an FSD; the contribution notice may be issued to any one or more of the persons to whom the FSD was issued, and the sum specified in the notice may be the whole or a specified part of the actual or estimated section 75 debt in relation to the scheme at the ‘time of non-compliance’ – for example, immediately after the expiry of the period specified for putting in place financial support.
The Pensions Dashboards Programme (PDP) has published a blog post on consumer protection in relation to personal data issues, and how the organisations involved will work together to ensure consumer safety. In particular, the blog post considers the PDP’s liability for the central digital architecture of the dashboard and how this can ensure accuracy in user identities, on which schemes and providers will rely. Issues relating to scheme and provider duties and liabilities will be set out in regulations in the next few months; TPR is also expected to publish interim guidance on pensions dashboards shortly.
Revised industry guidance on transfers from the Pension Scams Industry Group has been expected for some time, following changes to the transfer regulations in late 2021. It is now reported that the revised Code and other materials may be published in early June and that the Code will set out a risk-based approach to some of the problem areas in the new regulations. It will also expand on the use of ‘clean’ lists (lists of schemes to which transfers can be made without additional due diligence for each transfer).